TORONTO — Licensed medical marijuana producer Tilray Inc. has formed an exclusive alliance with Sandoz Canada, in what it says is the first collaboration between a cannabis producer and a local affiliate of so-called Big Pharma.

Tilray, headquartered in Toronto with production facilities in British Columbia, has signed a binding letter of intent with the Quebec-based affiliate of Sandoz International GmbH, part of global healthcare company Novartis.

As part of the agreement announced Monday, Tilray will become the exclusive collaborator with Sandoz Canada on cannabis-based medical products which are non-smokable or non-combustible such as gel caps and sprays for the domestic market.

Subject to future regulatory changes, the aim is to distribute on a wholesale level these co-branded products to Canadian hospitals and pharmacies, said Tilray’s chief executive officer Brendan Kennedy.

There is still much skepticism towards the medical marijuana industry, and this collaboration with a recognized pharmaceutical company will help alleviate that, he said.

As well, patients and physicians may feel more comfortable with cannabis-based products in forms such as pills and creams that are familiar.

“That was part of the opportunity we saw… To distribute Tilray products that have the Sandoz logo that pharmacists, physicians and patients are used to seeing in their pharmaceutical packages. I think that will give physicians confidence and trust in our brand and our product,” he said in an interview.

This agreement is the latest example of widening acceptance of cannabis as medicine, as Canada moves to legalize marijuana for recreational use later this year.

For example, Sun Life Financial Inc. has added medical marijuana as an option for its group benefits plans as of March 1 after queries from its employer clients, marking a shift for the industry.

Several benefits plan sponsors already cover medical cannabis costs for their employees including Loblaw Companies Ltd., the Ontario Public Service Employees Union and the University of Waterloo’s student union.

Patients and doctors appear to be warming up as well.

According to the latest figures from Health Canada, there were 235,621 registered medical marijuana patients at the end of September 2017, up 35 per cent from 174,503 at the end of April 2017.

The total number of medical practitioners who have ever provided a medical document for a client who registered with a licensed marijuana producer was 10,433 at the end of September, up from 9,726 three months earlier, when data was first gathered.

Meanwhile, the pharmacy industry has been positioning itself to distribute medical cannabis.

Shoppers Drug Mart has lined up supply agreements with four licensed producers, including Tilray, and Shoppers parent company Loblaw has filed for a producers license which would allow it to distribute the drug. Other pharmacies such as PharmaChoice has also signed marijuana supply agreements.

The Canadian Pharmacists Association has also said pharmacies should play a leading role in the drug’s distribution.

Health Canada said recently in a consultation paper that it intends to work with the provinces and territories and the National Association of Pharmacy Regulatory authorities on options to control the sale and display of cannabis to youth, which could include controlling them behind the counter at pharmacies.

Kennedy is optimistic that cannabis products will be sold at pharmacies by the end of the year.

He said Tilray had been in dialogue with Sandoz since mid-2017. Sandoz, whose focus is on generic pharmaceuticals and biosimilars, brought in some individuals to explore medical cannabis products and the overall industry 18 months ago, said Kennedy.

The first phase of the companies’ alliance is to develop new products. The second phase, Kennedy said, is to leverage Sandoz’ supply chain and sales force to educate pharmacists about these new products, he added. The third phase would be to distribute co-branded Tilray Sandoz products to pharmacies across Canada by end of the year pending regulatory approvals.

“A lot of pharmaceutical companies are paying attention to what’s happening in this industry, and over the past few years we’ve had conversations with a few of them… This is a huge milestone for us,” said Kennedy.

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